Which of the Following Statements Is True of a Country

question 106

Multiple Choice

Which of the following statements is true of a country that has a gold standard exchange
Rate system?

• A) A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase the price of gold.
• B) A country running a deficit in its balance of payment would experience an outflow of gold which would force it to decrease the price of gold.
• C) A country running a deficit in its balance of payment would experience an outflow of gold which would force it to reduce its money supply.
• D) A country running a deficit in its balance of payment would experience an outflow of gold which would force it to increase its money supply.

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Definitions:

Export

The process of shipping goods or services from one country to another country for sale or trade.

Specialize

The process of focusing efforts and resources on a narrow area of expertise or production to increase efficiency and proficiency.

Comparative Advantage

The ability of a country, company, or individual to produce a good or service at a lower opportunity cost than competitors.

Autarky

An economic policy or situation in which a country is self-sufficient and does not engage in international trade.